South Africa: Exemptions From The Minimum Wage For Farm Workers: A How-To Guide

Certain parts of the Western Cape's farming
industry have been adversely impacted by a number of strikes during
the latter portion of 2012 and the early part of 2013. The strikes
and protest actions were ostensibly in support of a demand for an
increase in the daily wage of farming employees, from R69 a day to
R150 a day.

A new minimum wage of R105 per day was introduced in the
Government Gazette No 36115 on 5 February 2013 ("the new
minimum wage"). The Gazette also amended the minimum wage
provisions contained within Sectoral Determination 13, Farm Workers
Sector, South Africa ("the sectoral determination") of
the Basic Conditions of Employment Act 75 of 1997 (as amended)
("the BCEA").

The new minimum wage will be effective from 1 March 2013 until
28 February 2014. It is subject to a further annual increase of CPI
(consumer price index) + 1.5% in the two years subsequent to the
period ending 28 February 2014. In addition, this increase formula
will apply to any wage which is already over the minimum rate.

At this delicate and nascent stage of the South African
renewable energy industry, foreign direct investment is a necessary
antidote.

Exemptions

Section 50 of the BCEA makes provision for exemptions from
Ministerial determinations such as the new minimum wage
determination. Having regard to section 50 of the BCEA:

The employer must complete a BCEA Form 6 (application for
ministerial determination) ("the application");

The employer must determine whether there are any trade unions
representing its employees. If it is the case, the employer must
approach the trade unions and attempt to obtain their consent to
the application. In the instance that their consent is obtained
proof of such consent must be attached to the exemption
application;

If they do not consent then the employer must, nonetheless,
serve a copy of the exemption application on the trade union(s)
notifying them that they can make representations to the Minister
of Labour;

If there are no trade unions, the employer must attempt to
obtain the consent of the employees affected by the application. In
addition, the employer must depose to an affidavit which states
inter alia that "none of the employees affected by the
application are unionized". If they consent, then proof of
such consent must be attached to the exemption application;

If they do not consent, the employer must nonetheless, provide
proof of the reasonable steps taken by it to bring the application
to the notice of the employees, such as posting a copy of the
notice on the employees' notice board or at the entrances to
their homes. These steps should also be recorded in the
employer's affidavit.

The employer must also furnish copies of the it's
"project plan", a strategy document which sets out the
employer's plans and projections for meeting the prescribed
minimum wage, a list of current employees and their wages and a
copy of the employees' shift roster (if applicable).

The application must contain copies of the employer's
financial statements - specifically its balance sheet and cash flow
statement for the last financial year, and a summary of its
financial position in a prescribed form. The prescribed form
requires additional financial break downs, specifically the gross
farming income for the previous financial year and an estimate for
the current financial year less the expenditures (again for the
previous and current financial years) such as rent, interest
payments, levies (e.g. RSC, SETA), seed and fertiliser, fodder
irrigation, cash remunerations (details of each worker must be
provided separately), value of payment in kind to farm workers,
maintenance, fuel and chemicals (e.g. dips and sprays) and any
other expenses. Given the above requirements, it is clear that a
pivotal factor in deciding whether or not to grant an exemption
will be the financial viability or otherwise of the employer and
what effect the increased minimum wage will have on that financial
status.

Time periods

Although there is no deadline by which exemption applications
must be received, it is nonetheless advisable to lodge the
application with the DOL as soon as possible. Should the
application for exemption be granted it will only be granted from
the date it is received by the DOL's head office.

In the instance that an application is instituted before 1 March
2013, the employer will not be obliged to increase the wages until
such time as the exemption application has been considered.
However, should it subsequently transpire that the application for
exemption has been denied by the DOL, the employer will be obliged
to back pay its employees accordingly.

Should an application be lodged after 1 March 2013 the employer
must comply with the increase to the minimum wage from 1 March
2013. Any decrease to the wage prior to receiving the outcome of
the exemption application would be ill advised.

Should the exemption subsequently be granted it will be unlikely
that it will have retrospective effect. An employer will not be
entitled to recover the difference between the minimum wage and the
subsequent amount payable under the terms of the exemption from the
employees for the period between 1 March 2013 and the approval of
such exemption.

Conclusion

Although it is possible to apply for an exemption it will only
be granted if the employer can give adequate reasons justifying why
it should be exempt from the prescribed minimum wage.

Having regard to the requirement to provide a variety of
financial documents it is clear that the financial viability of the
employer will be a key factor in determining whether or not to
grant an exemption.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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